Health Care Providers and Colleges and Universities
TRUE/FALSE (CHAPTER 13)
The statement of financial position of a not-for-profit health care organization should
distinguish among unrestricted, temporarily restricted, and permanently restricted net assets.
Unlike businesses, not-for-profit health care providers often serve patients who they know
will be unable to pay any portion of the amounts billed.
Private not-for-profit colleges and universities are subject to the same FASB standards as other not-
Restricted funds of a not-for-profit nursing home are not available for current use; however,
the income earned on the funds is available.
Charity care provided by a health care organization would be recorded in a contra-revenue
In a not-for-profit health care organization, the cost of malpractice must be accrued if it is
either probable that impairment has occurred or if the amount of loss can be reasonably
In a public university setting, general administration and sponsored research are examples of
revenues classified by source.
Long lived assets held by public universities are carried at cost, or fair value if donated.
Investments of a public college must be reported at fair value.
Prepaid health care plans that earn revenue from agreements to provide service record
revenue when services are rendered.
Tuition revenue should be reported net of tuition discounts and scholarships.
In accounting for colleges and universities, related entities should either be disclosed in the
Notes to the Financial Statements or reported as component entities, depending on the degree of
control and economic interest.
Under GASB 39, colleges and universities are required to bring their affiliated medical
organizations into their financial reports.
MULTIPLE CHOICE (CHAPTER 13)
Financial statements for Smith College, a church-supported college, should be prepared
according to standards set by
Smith may choose any of the above.
For a not-for-profit hospital, which of the following financial statements is NOT required?
Statement of financial position.
Statement of activities.
Statement of cash flows.
Statement of functional expenses.
For a not-for-profit college or university, which of the following categories of net assets is
NOT appropriate in its external financial statements?
Unrestricted net assets.
Temporarily restricted net assets.
Permanently restricted net assets.
All of the above are appropriate.
Katerah College, a private college, received a $1 million donation.
The donor specified that
the principal of her gift could never be used for program activities but the earnings on the
principal must be used to provide scholarships to academically qualified students in the
The $1 million gift would increase which of the following categories of net
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